News…

July 2018

Update:  California ABC issued an advisory on this- California says no CBD allowed in food (wine and beer are food):

FAQ – Industrial Hemp and Cannabidiol (CBD) in Food Products

cdph.ca.gov

Beer giant Molson Coors just acquired Clearly Kombucha!   A sign beer is searching to differentiate in the healthier beverages?  Will we see more of these beer-kombucha combinations??  The deal was led by TAP Ventures, a division within Molson Coors’ enterprise growth unit that launched last year and is tasked with identifying investment opportunities outside of the traditional beer segment.

“The TAP Ventures team has been looking into opportunities in the kombucha space for the past year and identified Clearly Kombucha as an attractive company based on the growth of the health and wellness category, as well as the strength and expertise of the Clearly Kombucha team,” a Molson Coors spokesman was quoted as saying.

April 10, 2018- Conferences

I just got home from the California Craft Brewers Conference. I found it pretty frustrating.  Not the brewery visits, or most of the panels, which were uniformly informative and well done.  But by the legal advice. I was surprised how conservative the lawyers on the panels were! I wonder if not having worked in house has shaped them to be quick to say “no- can’t do that”.  When you are inside a company working with eager salespeople, the question is usually “how can I tweak this event plant, it’s happening tomorrow”, rather than a theoretical question about “can I do x or y”.  I think it’s been useful training!   We had a very interesting panel on local government.  Much like working with the right lawyer, the right city that wants your business will find a way to fit your business into the city code.  Brewers use water + yeast + heat, so they are bakeries! Thoughtful city planner throughout San Diego have permitted them in this way.  Where the law looks daunting, sometimes you need creativity.

And today John Boehner joined the board of a cannabis company.  A sign the national mood is changing when former enemies change tack?

March 8, 2018

Kombucha:

If the kombucha that you produce, distribute or sell has over 0.5% alcohol by volume at any point during the production process, you are likely subject to the IRS and TTB provisions that apply to alcohol beverages.  Additionally, the bottles must be labeled with the health warning statement required by the Alcoholic Beverage Labeling Act of 1988. Depending on how your product is produced, other marketing and permitting requirements may apply.  See this sheet for more info-Kombucha 2 sheet.

February 2, 2018 – News from the ICBC

The International Cannabis Business Conference was full of voices from across the industry.  Lori Ajax opened the event sounding a very business friendly note from the State.  What was implied in her address was- it’s not our fault; the industry needs to convince local regulators to play ball!  And that pain point was echoed by many would-be legal growers and dispensary owners as well. They are ready to come into compliance, but can’t get a license, or even the local regulator’s attention.  In this industry, active players have to get active in local politics in a way most of us are not used to.  But your ability to pull a license or open a dispensary depends on what your city or county has to say. Your tax rates are set- and range widely- depending on locality too. So go ahead- attend that city council meeting and have your say!

On a personal note, I met a group of cannabis lawyers from around the country and am happy to see my network and my ability to assist clients expand.

January 20, 2018 – You can’t eat that gummy at a winery?

There’s some disappointing guidance from the ABC on consuming legal cannabis on premises licensed for alcohol. Industry members know they cannot sell alcohol and cannabis at the same location, but some had hoped they would be able to allow consumers to imbibe cannabis products delivered or “BYOB’ed” to their premises.  ABC says, not so fast.  This may present problems for weddings, events, and for any hope of “wine and pot pairings” on a licensed premise.  According to the Industry Advisory, “This restriction applies even if the ABC licensee is not exercising the privileges of the license, such as after hours, while closed, or if the ABC license is surrendered or suspended.” But what the ABC advises is not necessarily the last word on a matter.  This isn’t legal advice, just some interesting news.

See the advisory here: https://www.abc.ca.gov/trade/INDUSTRY%20ADVISORY_CannabisAndAlcoholicBeverages.pdf

December 15, 2017 – New Regulations

The ingredients are coming together for the arrival of legal recreational cannabis in 2018!  Cannabis regulations have been sent out from the Bureau of Cannabis Control for comment.  While not final yet, there are some highlights to point out:

  • Unlike in the alcohol industry, cannabis companies are permitted to have vertical integration across tiers.  The same entity can grow, distribute and conduct retail sales.  The only part of the chain that has to go to a separate entity is pesticide/quality testing.
  • Delivery is in many cases legal, though a county or city can vote to prevent it.
  • Retailers have to form their corporate structure and get a local license prior to getting a state license and engaging in commerce.
  • Allows adults 21 and older may possess up to one ounce of weed or eight grams of concentrated cannabis in public or at home and may grow up to six plants per residence.
  • On taxes, medical and recreational cannabis are treated quite differently. Recreational sales include: (1) a 15 percent excise tax on cannabis retail sales; (2) a cannabis cultivation tax of $9.25 per ounce of flowers and $2.75 per ounce of leaves; and (3) local  taxes ranging from about 7.7 to 9.7%. Sound high? It is a total of about 45 percent on recreational pot.
  • Under Prop 64, small farmers were set to get a leap on licenses, with a five year lead over big growers.  That plan is not reflected in the Emergency Regulations, but this is an area likely to change in the final regulations.

 

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